Serious value added tax increases threaten non-profit associations

bdvv (openPR) - statement of the Federal association of German associations & federations (bdvv) to the draft of the annual tax law 2007

The draft of the annual tax law 2007 contains a value added tax reorganization (too § 12 paragraph 8a of the value added tax law), whose meaning and consequences became to survey nearly complete for nonprofit organizations so far in the public debate.

Afterwards any longer the reduced value added tax set of 7% is not to apply without reservation to the tax-privileged economic fields of activity of non-profit bodies (the so-called purpose enterprises). „In connection with the value added tax increase to 1 January 2007 a fiscal additional charge of 12% means! “, Wolfgang's stressed pepper, finance executive committee bdvv.
While so far to all purpose enterprises the reduced value added tax set applies, that should be in the future only the case, if
- does not stand the purpose enterprise in competition too for not favoured enterprises of other entrepreneurs
- or with the purpose enterprise the statute purposes to be carried out directly.

To which purpose enterprises that will apply, the reorganization leaves open. An adequate legislative reaction is the novella neither on the defaults of the 6. EEC guideline for value added tax harmonization still in the arisen cases of an organization abuse by integration enterprises.
The reorganization entails however presumably not only a serious additional charge for the members, customers and clients of non-profit associations, but leads also to substantial juridical insecurity. Since it is to become effective already to 1 January, it will be hardly possible to convert it by financialofficial instructions uniformly.
In particular a substantial scope for discretion exists with the interpretation of the reorganization. Therefore arbitrary decisions of the tax offices, which might be made excessive demands of with the conversion of the novella likewise, threaten the associations.
Bdvv Federal Government and Upper House of Parliament requested to suspend the legislative procedure concerning the §12 paragraph 8a of the value added tax law until in coordination with fiscal authorities and federations a clear and practicable reorganization was found.
In particular such a regulation is to prevent the organization abuse in individual cases, without harming the non-profit mechanisms surface covering. It would be necessary to exclude the value added tax reduction only for the concrete cases of organization instead of bringing by just as vaguely as general regulation various capacity ranges of nonprofit organizations into a partially existence-threatening situation.

Deepening references:

- Draft of an annual tax law 2007
dip.bundestag.de/btd/16/027/1602712.pdf

- Federal Audit Office, report to the financial committee of the German federal daily for the draft of an annual tax law 2007, reference number VIII 2 - 2006 - S 1910
www.bundestag.de/ausschuesse/a07/anhoerungen/030/Stellungnahmen/05-Bundesrechnungshof.pdf

- Statement of the Upper House of Parliament, print 622/06
www.bundesrat.de/cln_051/nn_8336/SharedDocs/Drucksachen/2006/0601-700/622-1-06,templateId=raw,property=publicationFile.pdf/622-1-06.pdf

Press contact:
bdvv registered association.
Einstein bank 57
10587 Berlin
Telephone: 030 34 78 7877
Fax: 030 34 78 7901
Email: presse@bdvv.de
www.bdvv.de

The Federal association German unites & would connect registered association (bdvv) is an approach place and a language pipe for clubs and societies in Germany.

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